Paper Title
An Application on Time Inconsistency: Monetary Authorities and Private Sector Game

Abstract
This paper is based on Barro and Gordon(1983a,b)�s discretional equilibrium. Inflation may result from the structure of the strategic relationship between monetary authorities and the private sector instead of time inconsistent policies. Therefore, this paper has applied the game theory approach to time inconsistency problem to analyze the from a different point of view by the Nash equilibrium(discretional equilibrium) solution, in the interaction between monetary authority and private sector. One of most important findings is that even if private sector have a perfect foresight about inflation, its inflation-averse behaviour will reduce to social loss. Keywords� Nash Equilibrium, Loss Analysis, Time Inconsistency.